Long-term Operation ofNuclear Power Plants andDecarbonisation Strategies
Mr. Antonio Vaya Soler, Analyst
Nuclear Technology Development and Economics
OECD/NEA

Note: Beznau nuclear power plant. PWR Unit 1 is 52 years old, being the oldest operating
reactor in Europe.
Source: Courtesy of SwissNuclear.

16th IEEJ Global Energy Webinar
November 26, 2021

© 2021 Organisation for Economic Co-operation and Development1Outline• Motivation: The Challenge of Decarbonising without Long-term Operation (LTO)• Scope and Objectives: The Holistic Nature of LTO Investment Decisions• Key Findings• Conclusions and Policy Recommendations• Publication of the Report© 2021 Organisation for Economic Co-operation and Development

2Motivation:
The Challenge of Decarbonising without Long-term Operation (LTO)• Nuclear power is the second largest
source of low-carbon electricity inthe world (1st in OECD)

Plant closures by country and reason according to stated policies inOECD countries, 2011-2025
255%

1523%

• LTO benefits also include
affordability and security of supply
considerations• More than 60% of recent closuresmotivated by policy decisions andchallenges with existing markets

2045%

105027%

PolicyTechnico-economic

MarketAccident

Note: The technologies covered are LWRs and PHWRs. The plant closures in Japan due to policy
reasons were decided by the utilities considering the request from national and/or local government.

With an average age of 35 years in most OECD countries, LTO investments will play a growingrole to support ambitious decarbonisation strategies in the current decade, and governments havea key enabling role to play
© 2021 Organisation for Economic Co-operation and Development3

Scope and Objectives:
The Holistic Nature of LTO investments• In practice, LTO decisions are complex and require theanalysis of multiple factors beyond technical aspects.

Internalcapabilities• Enabling LTO requires a holistic approachencompassing the internal capabilities of the existing
fleet and the specificities of their policy context.

Policycontext• Opportunity to update the 2012 LTO costs figures andto include new values in the 2020 edition of theIEA/NEA Projected cost of Generating Electricity
publication

Enabling
LTO

Objective: perform a comprehensive analysis of LTO in all its dimensions in order to identify keyfactors/conditions that would enable longer operating timeframes for existing reactors to meetclimate targets.
© 2021 Organisation for Economic Co-operation and Development

4Key Findings
Preconditions for LTO
1.

LTO is enshrined in most regulations as part of a continuous improvement logic
I. Case Study – Assessing the impact of legal operational limits in Japan2.

No major technical showstopper for longer operating periods and adaptations
II. Case Study – Operation beyond 60 years in the United States

LTO in decarbonisation strategies
3.

LTO supports ambitious decarbonisation strategies and other policy priorities

4.

The importance of a low-carbon mix based on mature solutions

5.

Managing emissions in a predictable manner

6.

The competitiveness of LTO in today's electricity markets
III. Case Study – LTO costs in Japan: Lessons from the NEA EGLTO

Industrial implications of LTO
7.

Operations continue to improve despite ageing

8.

Supply chain risks are a rising concern© 2021 Organisation for Economic Co-operation and Development

51. LTO is enshrined in most regulations as part of acontinuous improvement logic• Most laws or regulations provide forLTO approval approaches

indefinite terms or allow for unlimited
extensions• In terms of safety, ageing issues andnew safety and security requirements
are the main areas of the LTO-review
process• Environmental impact assessments,

including transboundary
consultations, can be part of the LTOreview process© 2021 Organisation for Economic Co-operation and Development

Source: OECD/NEA (2019)6

I. Case Study – Assessing the impact of legal operational
limits in Japan• Japan is one the few countries limiting

the overall operational lifetime by law up
to 60 years• Limiting the operational lifetime reduces

the economic attractiveness of LTO,
especially if investment cost are high• The 6th Strategic Energy Plan targets

for nuclear power will be difficult toachieve without LTO

Age distribution of nuclear reactors in Japan

2021
Within initiallicence(<40y)
LTO(>40y)
0

5101520
Number of reactors

2530

0

5101520
Number of reactors

25302030
Within initiallicence(<40y)
LTO(>40y)

Source: IAEA PRIS, JAIF (2021)© 2021 Organisation for Economic Co-operation and Development

72. No major technical showstopper for longer operating
periods and adaptations

Almost all components
can be replaced

Main ageing
phenomena in lifelimiting components
well-understood

Safety upgrades are
typically combined withplant enhancements(e.g. power uprates)

LTO should not face major generic technical barriers if utilities implement enhanced ageing
management programs using the technical evidence already available while performing thenecessary repairs and replacements.
© 2021 Organisation for Economic Co-operation and Development

8

II. Case Study – Operation beyond 60 years in the United States• Technical uncertainties for operations
beyond 60 years are decreasing:– 6 reactors approved and intent covers
20% of the US fleet

License renewals trends in the United States
100%90%80%70%• Technical evidence exists but moreefforts needed to track:60%– Increased susceptibility to existing
ageing phenomena

30%

50%
40%
20%
10%

– New degradation modes0%• Final decision mainly driven by market
conditions rather than technicalchallenges

60 yearsCompleted80 years
Under review

IntentSource: OECD/NEA based on NRC (2021) and NEI (2020)© 2021 Organisation for Economic Co-operation and Development

93. LTO supports ambitious decarbonisation strategies
and other policy Priorities

Source: OECD/NEA and IEA/NEA (2020)

Enhancing security of supply

Fostering system affordability andinvestment efficiency

Projected global cumulative emissions
avoided by nuclear power, 2020-2050

Evolution of nuclear and coal capacity inEurope according to stated policies, 2040

LCOE by technology, 2025

300.0

Gen-IIINew
Build
21%

Gen-II
LTO
71%

250.0
Capacity (GW)SMR/AMR8%200.0-160 GW

150.0
100.0
50.0

LCOE (USD/MWh)

Avoiding carbon emissions

3002502001501005000.0
2020 2025 2030 2035 2040
CoalLTO could help bridge the gap towards
carbon neutrality and absorb shortfalls inemissions reductions and new capacity
additions

Nuclear

Maintaining adequate capacity levels
through LTO can reduce system stress andsupport the integration of higher shares ofvariable renewables© 2021 Organisation for Economic Co-operation and Development

LTO is the most competitive low-carbon
option providing also sizeable benefits atthe system level, and more time tosequence investment plans
104. The importance of a low-carbon mix based on mature
solutions– Increased price volatility

Indian Point 3 retiresApril 30, 2021

300

6200
150

3gCO2/kWh

250

10050

NuclearNatural gas

Hydropower

Renewables

Oct-22

Jul-22

Apr-22

Jan-22Oct-21

Jul-21

Apr-21

Jan-21

Oct-20Jul-20

Apr-20Jan-20

Oct-19Jul-19Apr-19Jan-19Oct-18

Jul-18Apr-18Jan-18Oct-170

Jul-170

Apr-17– Increased CO2 emissions

Indian Point 2 retires
April 30, 2020

Jan-17• In the short term, nuclear power islikely to be replaced by a
combination of variable renewables
backed up by fossil-fired plants:

9TWh• Nuclear power provides systemstrength and flexibility as well as low
and predictable operational costs

Electric power generation by fuel, New York ISO, Jan-2017-Dec 2022

Avg. carbon footprint

Note: Carbon intensity has been computed using the mean values for each technology from Bruckner(2014). Source: OECD/NEA using data from EIA (2021)

Effective decarbonisation strategies i) avoid the closure of existing low-carbon assets andii) combine different low-carbon options to displaced fossil fuels and minimize risks© 2021 Organisation for Economic Co-operation and Development115. Managing carbon emissions in a predictable manner
Global nuclear capacity by scenario, 2020-2050• LTO together with new build key to900

keep up with climate targets by 2030.

800
700

bridge the gap towards carbon
neutrality with LTO representing 40%of the emissions avoided by 2050.

600• Effective way to absorb shortfalls inemissions reductions and newcapacity additions.

GW• Longer operating periods could help

500
400

300
200
10002020

Planned LTO

2025

2030

Planned Construction

2035

2040

NZE policy gap

2045

80 years

2050

40 years

Note: Planned LTO projections take into account announced closures and extended lifetimes, in linewith stated policies, market conditions and regulatory approvals principally in Europe and the UnitedStates© 2021 Organisation for Economic Co-operation and Development

125. Managing carbon emissions in a predictable manner
Global nuclear capacity by scenario, 2020-2050• LTO together with new build key to900

keep up with climate targets by 2030.

800
700

bridge the gap towards carbon
neutrality with LTO representing 40%of the emissions avoided by 2050.

600• Effective way to absorb shortfalls inemissions reductions and newcapacity additions.

GW• Longer operating periods could help

500
400
300
200
10002020
Planned LTO

2025

2030

Planned Construction

2035

2040

NZE policy gap

2045

2050

80 years

40 years

Note: Planned LTO projections take into account announced closures and extended lifetimes, in linewith stated policies, market conditions and regulatory approvals principally in Europe and the UnitedStates© 2021 Organisation for Economic Co-operation and Development

13

6. The competitiveness of LTO in today’s electricity markets (1/3)
LCOE by technology, 2025
300

• LTO is the most competitive low-carbon option in many regions.

250

reductions associated withdispatchability, air pollution andclimate change benefits.
• Additional time to sequence

investment decisions and optimise
industrial plans and policies.

LCOE (USD/MWh)• VRE integration and external cost

200

150

100

500

Coal

Gas (CCGT)

Nuclear

Nuclear(LTO)

Onshorewind

Offshore
windSolar PV(large)

Note: Coal includes lignite plants. Discount rate of 7% and carbon price of USD30/tCO2
Source: IEA/NEA (2020)© 2021 Organisation for Economic Co-operation and Development

14

6. The competitiveness of LTO in Today’s Electricity Markets (2/3)• LTO investments for LWRs can be

estimated at USD450-950 per kWe andfall into three main categories:

Based on new data and analysis, NEA has updated the estimatedranges for levelised cost of electricity for 20 years of LTO
80– LTO program– Replacement & other works– Post-Fukushima safety upgrades• Financing risks are low:
– Predictable investments owing to a well-LCOE (USD/MWh)

7060
50

– Relatively small-sized investments

high: 414030

low: 35
low: 26

20100

developed learning curve– Reduced technical scope and complexity

high: 672012
estimates

2020
estimates

Note: 2012 values computed for overnight costs of USD2010500-1090 per kWe, discount rates of3% and 8%. 2020 values computed for overnight costs of USD2018450-950 per kWe, discountrates of 3%, 7% and 10%. Capacity factor of 85% in both cases.
Source: NEA(2012) and IEA/NEA (2020).

© 2021 Organisation for Economic Co-operation and Development

15

III. Case Study – LTO costs in Japan: Lessons from NEA EGLTO• Adapting to new regulatory

Evolution of regulatory requirements in Japanrequirements and building localpublic acceptance dominate
investments over the last years• As a result, LTO costs in Japan canbe greater than in other jurisdictions(e.g. EU, US)• LTO still remains a competitive

option in Japan compared withvariable renewables and fossil fuels(>USD90/MWh)© 2021 Organisation for Economic Co-operation and Development

16

6. The Competitiveness of LTO in Today’s Electricity Markets (3/3)
Options for specific support measures• It is important for electricity markets toplace value on desired performanceand outcomes: low-carbon,
dispatchability, reliability and security
deregulated markets are incentivized byspecific support measures:

Decommissioning andwaste management feeTaxes
LCOE

USD per MWh• Many low-carbon investments inPolicies

Support mechanisms
Ancillary services– These measures should beapplicable to LTO, which supports
strategic priorities

Capacity
Energy• Measures can create incentives onboth the revenues and costs sides

Revenues© 2021 Organisation for Economic Co-operation and Development

Costs

17

7. Operations continue to improve despite ageing
Qualitative evolution of the performance level of an NPP over time

Performance level

Safety upgrades

Year 0Technicalprogress

Operationalexperience

LTO

Governing
framework

Replacements

Materials
ageingTime

NPP performance results from the combination of several factors, including organisational aspects,
that enable continuous safety and operational improvements.
© 2021 Organisation for Economic Co-operation and Development

18

8. Supply chain risks are a rising concern
Companies holding N-type ASME qualification, 2006-2019• Components obsolescence resulting from450

market and policy uncertainties andhigh qualification needs• A range of industrial solutions to address
this challenge:– Commercial-grade dedication– High collaboration and harmonization– Reverse engineering– Human resource and knowledge management374331350300

Number• Difficulties to attract and retain talent

395

400270250200380340323308

2942702211731801961501005002006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Source: OECD/NEA based on data WNA (2020)

The supply chain is critical in sustaining operational and economic performance and nuclear
industrial policies provide a functional framework to build up industrial capabilities© 2021 Organisation for Economic Co-operation and Development

19

Conclusions and Policy Recommendations

EnablingLTO

LTO is a safe and mature solution to foster ambitious decarbonisation strategies• Maintain existing low-carbon capacity• Enlarge the technical basis on ageing mechanisms and their management

Existing nuclear power plants can be enhanced to cope with a changing environment• Support new technologies and plant enhancements• Foster cooperation to capitalise on extensive industrial experience

The supply chain is critical in sustaining operational and economic performance• Sustain supply chain capabilities and nuclear expertise at all levels• Build long-term and predictable industrial plans

Recognising the full value of the LTO option in decarbonisation strategies• Reform market regulations to ensure that the system value of extending operations is adequately
remunerated© 2021 Organisation for Economic Co-operation and Development

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New Report: Long-Term Operation of Nuclear Power Plants
and Decarbonisation Strategies
Launched in July 2021 with an event thatgathered legal and industry experts

Launch event: https://www.oecd-nea.org/jcms/pl_60360/the-most-cost-effectiveReport: https://www.oecd-nea.org/jcms/pl_60310/long-termoperation-of-nuclear-power-plants-and-decarbonisation-strategies decarbonisation-investment-long-term-operation-of-nuclear-power-plants© 2021 Organisation for Economic Co-operation and Development

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Thank you!

Contact:report@tky.ieej.or.jp© 2021 Organisation for Economic Co-operation and Development22